A new report has revealed that the UK’s
late payment culture is putting job creation at risk.
The report, by employee spend management company
Concur, highlighted the problems late payment can cause for companies, with many being forced to take action to protect cash flow, including:
- making redundancies (7%),
- stopping planned investments (17%),
- being unable to pay salaries (15%),
- and significantly reducing innovation spend (10%).
A further key finding of the report is that 40% of British businesses have received a late payment in the last month. Such a high volume of late payments is worrying, particularly when 23% of business deaths are currently caused by late payments.
Small businesses are often thought to be the main victims of late payment, but the research found that medium sized businesses can often be worst affected. It found that 63% of medium sized businesses (50-249 employees) receive late payments at least once every month, compared to 40% of small businesses.
“As Britain builds its digital future, it’s shocking that so many medium-sized businesses are the most heavily affected by late payments,” commented Emma Maslen, Senior Regional Director for Enterprise at Concur. “This underlines the very real risk this culture poses to the viability of some of the country’s leading employers.”
“Although not cash-rich, small and micro businesses have the agility and flexibility to make strategic decisions when it comes to cash flow,” she added. “And of course, enterprises more often than not have a ‘cash cushion’ available to bail them out in difficult situations. But for the mid-market, they have reached a position where they need to keep salaries and expenditure consistent, meaning they lack agility, but may be operating at a relatively slim margin in comparison to bigger players. This is crucial information about the oft-forgotten middle of our economy.”
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